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Effective Policy Tools and Quantity Controls
Roger Guesnerie
Kevin Roberts
Abstract
This article focuses on the desirability of quantity controls in an economy when the first best optimum is not attainable. Based on the analysis of constrained consumer demand, a formula for the desirability of small personalized compensated quotas is first established. Conclusions for the desirability of anonymous quotas: redistribution in kind, rationing, are derived. Actions on prices through taxes and quantity controls are compared. The analysis is also shown to have implications for the theory of optimum income taxation.
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